9. Debate: The Second Supplementary Budget 2020-21

Part of the debate – in the Senedd at 6:42 pm on 17 November 2020.

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Photo of Mike Hedges Mike Hedges Labour 6:42, 17 November 2020

Can I thank the Minister for her statement? My second supplementary budget speeches for the last nine years have up until now been very similar, and also very short. The second supplementary budget traditionally dealt with small in-year changes, and very little has happened. That is definitely not the case this year.

Some general comments. I do not underestimate the difficulty in dealing with a budget in these difficult times. Not only for the Welsh Government, but also health boards, councils, and other public bodies like Natural Resources Wales. I welcome the transparency afforded to the Senedd in bringing forward this additional supplementary budget, and believe the approach of additional supplementary budgets in extraordinary years needs to continue. I am pleased that the Finance Minister was able to confirm in the Finance Committee that the money announced by the Westminster Government equated to the money expected by the Welsh Government, because we had some concerns initially that the Welsh Government and the Westminster Government were not talking about the same sums, but that has apparently now ended, and we are talking about the same amounts. That was obviously a cause for concern, because Westminster announcements need to be partly the same as the receipts by the Welsh Government. The agreement now makes budgeting much easier.

One thing I'm not convinced of is the Welsh Government having two reserves: the general uncommitted expenditure and the health reserve held by the health Minister. I would urge the Welsh Government to hold all uncommitted expenditure centrally. This is not about taking money out of health, or giving money to health; it's about transparency and knowing where money is and how it's being taken out. I remember those Members in budget debates in previous Senedd budget meetings, who would urge councils to use their reserves when they were needed. This is the bad time. I would argue now is the time reserves are needed in the councils, which ignored the previous advice, made the right decision. If they thought that was a bad time, I'm not sure what this is, but this would be an extremely very bad time.

Welsh Government needs to provide a breakdown of the funding claimed by each local authority against the additional funding the Welsh Government has made available. Also, a report on council projected reserves, excluding schools' delegated budgets, would be helpful, and an update on schools' delegated budgets and the number projected to go into deficit this year would also be helpful. And this is only anecdotal, but I know a number of schools in my own constituency who have concerns about going into a budget deficit during this year, because of all sorts of things that have happened over which they've had no control. I believe we will need of a third supplementary budget in the new year, possibly a fourth, to deal with things such as further details on any subsequent funding for track, trace and protect, particularly the protect element of the strategy, as well as further business support payments. It would be helpful to have a table of how reserves have been earmarked, in terms of what has been allocated to the COVID-19 reserve, what the unallocated reserves are, when they are likely to be allocated, and where the money is expected to be spent—e.g. is it on health, by health boards, or on economic support, or in other areas?

And what is available for the end of the EU transition period, and what has been considered to be the priority for this expenditure? A 'no deal' Brexit could cause serious problems to some areas of the Welsh economy, such as sheep farming. If farmers have European Union tariffs, that will have a huge effect on sheep farmers—tariffs would vary between about 30 and 60 per cent, so they would have very little European market. China, which is the biggest sheep market, as I mentioned last week—they have already got free-trade agreements with New Zealand and Australia, so we may well have serious problems with that.

And—it was mentioned earlier by Rhun ap Iorwerth—what reserves are in place in the event of another winter producing the flooding that we had this year? We are seeing climate change, we're seeing additional flooding. We've probably seen more flooding in the first 20 years of this century than in the first 50 or 60 years of the last century. We are seeing substantial flooding, so these will need to be dealt with.

These are difficult times, and I know there are always more claims than there are financial resources available—that's why we have a Minister for Finance. COVID has just made this all the more difficult. I support the supplementary budget, but, as I say, I don't expect it to be the last supplementary budget in this financial year, and I commend the Minister on the openness of bringing these supplementary budgets to us.